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By Atul Prakash
LONDON, April 9 (Reuters) - Gold prices firmed on Wednesday
as the dollar slipped on growing expectations of further
aggressive rate cuts by the U.S. Federal Reserve.
Spot gold <XAU=> in recent days has made several failed
attempts to break $930 a a troy ounce.
Gold rose to a session high of $918.20 an ounce on Wednesday
before falling to a low of $902.80. It was at $917.70/918.60 at
1341 GMT, against $913.10/913.90 in New York late on Tuesday.
The dollar slipped as investors digested comments from
Federal Reserve policymakers pointing to continued weakness in
the U.S. economy and raising the prospect of a half percentage
point cut at the end of April.
A weaker dollar makes dollar-denominated metals cheaper for
holders of other currencies, but a slight recovery in recent
days has made gold bulls wary of adding to their holdings.
"The sentiment for gold remains positive, but the dollar
situation has created some uncertainty," said Frederic
Panizzutti, metals analyst at MKS Finance.
Traders said volumes were low as the market looked ahead to
central bank and Group of Seven (G7) meetings this week, which
could offer clues to the future direction of currencies and
bullion.
"The Group of Seven meeting on Friday has a lot to do with
the dollar. The big risk is that if they come out with some
major rescue plan for the banking system, gold will fall quite
sharply, said Matthew Turner, analyst at Virtual Metals.
CENTRAL BANKS
The market also looked at central banks for near-term
direction. The European Central Bank is expected to keep
interest rates on hold, but the Bank of England could cut its
key rate on Thursday.
A rate cut by European central banks tends to help the
dollar and is seen as negative for gold.
"Near-term dollar weakness should lift crude oil prices,
which should lead to a rise in precious metal prices," analysts
at Standard Bank said in a market report.
Gold is used as a hedge against inflation, often triggered
by rising oil prices.
Plans by the International Monetary Fund to sell some gold
from its reserves also hit sentiment, but analysts said the
market would absorb the sales, which are expected to take place
in a controlled manner.
The IMF is the world's third-largest gold holder after the
United States and Germany, with 3,217.3 tonnes in reserves. It
plans to sell 403.3 tonnes and use the profits to invest in
government and corporate bonds, and possibly equities.
Gold hit a record high of $1,030.80 an ounce on March 17
before falling to a two-month low of $872.90 last week in a
broad commodities sell-off.
Spot platinum <XPT=> was at $1,995/2,005 an ounce from
$2,008/2,018 late in New York, silver <XAG=> at $17.94/17.99 an
ounce from $17.64/17.69 and palladium <XPD=> at $450/458 from
$449/457 an ounce.
(Additional reporting by Pratima Desai)
(Editing by xxx)
